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Combined, Amazon, Apple, Google and Microsoft represent over $1 trillion in company value. Most of that trillion dollars has been created in the past decade. For the first five of those years, each of the four had a clear playing field in its niche. Amazon selling books and other consumer goods, Apple selling stylish, user-friendly computers, Google selling search advertising, and Microsoft selling packaged software.

For the most part, there was an uneasy peace between the four companies. Fifteen years ago Microsoft even invested $150 million into a struggling Apple to help guarantee a market for its very profitable Office applications on Mac. For many years, Google’s then-CEO Eric Schmidt was happily ensconced on Apple’s board. One in ten iPods was sold on Amazon.com. Hardly friends, as evidenced by Amazon dumping Microsoft’s search engine, the companies didn’t feel obligated to foil each other at every opportunity.

The iPhone changed everything

A number of major technology shifts helped change this mutual wariness into all-out war. Convergence of traditional and digital media brought Apple’s iTunes head-to-head with Amazon. A drive to control user experiences through the browser and productivity applications brought Google into increasing conflict with Microsoft. Most of all, however, the iPhone launch crystallized the reality that all four of these titans of tech were after the same thing — the world’s eyeballs and consumer pocketbooks.

The state of play in 2007. Green means competitive offering, yellow is partner, partial or beta, red means no product in the space. The updated, 2012 table can be found on the next page.

Like the TV networks in their heyday, all of them began to worry about every move made by each other. Google quickly countered Job’s iPhone with Android-powered devices, and piled on with Chrome OS to hit Apple in what was then its core business. In addition to threatening to go “thermonuclear” over Android, Jobs ever so politely severed Apple’s relationship with Schmidt, saying “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.”

Google decides to sell stuff

Perhaps the most puzzling set of moves during this period was Google’s drive to enter nearly every possible digital market that Amazon, Apple or Microsoft were already in. Beginning with an awkward attempt to direct-sell the Nexus One in competition with Apple, Google also started pitching an application suite and a desktop OS to tweak Microsoft’s tail. More recently it’s gone after Amazon’s core offerings with a late-to-the-game content initiative — part of Google Play — and an obvious attempt to horn in on Amazon Web Services (AWS) with the Google Cloud initiative.

Aside from ensuring a hostile relationship with Amazon and Apple — Google was already at war with Microsoft — it’s not clear that its effort to press the battle onto the other firms’ home turf has paid off for Google. Picking these fights has gotten it thrown out as the Maps provider for both Apple and Amazon, and has resulted in Amazon increasingly distancing itself from Google’s Android branding and applications. With Google showcasing a “reinvented” Motorola as its hardware division, it is hard to blame them. Just recently rumors have surfaced that Amazon may try to muscle in on Google’s key OEM, Samsung, by licensing it the Amazon app store as a replacement for Android’s native Google Play services.

Amazon gets into the hardware business

When Amazon saw the writing on the wall that digital media would be the future, it was quick to cannibalize its own book business with the revolutionary Kindle platform and accompanying e-books. An instant hit, e-books looked like clear sailing for the retail giant — until Apple once again upset the proverbial apple cart with the introduction of the iPad.

Suddenly Amazon’s chokehold on digital media channels was endangered — not so much by the iPad hardware itself, but by Apple’s determination to control the user experience and revenue stream coming from every iOS device. Whether or not Amazon had ever pictured itself as a vendor of general-purpose computing devices, it scrambled to come up with the Kindle Fire product to protect its share of the digital media market.

Although a giant among the relative weak-selling field of Android tablets, the original Fire certainly didn’t put much of a dent in Apple’s mobile device juggernaut. It did provide a showcase for Amazon’s new Silk browser — another attempt to corral mindshare of its users, in this case away from Google’s Android browser. Amazon’s latest salvo, the Fire HD, brings it head to head with the iPad, where it hopes its aggressive pricing will gain it some traction.

True enough, it is a great service for those who own an Xbox, but if it is going to really move Microsoft forward in the big picture it needs to be able to fully replace set-top boxes and needs to be packaged and priced for non-gamers, IMO. That would be unique, as neither Apple TV or Google TV have come close so far.

Nothing like sitting in the living room late at night watching the episode after episode of Weeds or Heroes and between episode saying “Xbox, play next” and the next episode starts right up. Kinect required, of course.

jqpabc123

Yeah, right. There can be only one — we all saw the movie.

What about IBM? They are a large technology company which predates all of the above. They’re still doing pretty well despite being left out of this analysis. Which only goes to question the whole premise of the article.

Google and Microsoft have enterprise offerings, but they’re really not in the same league as IBM. You could include IBM in a discussion about Dell/HP/etc (they have quite big enterprise departments), but even there, IBM is a cut above.

jqpabc123

Amazon compares to IBM as well as it compares to MS. Amazon’s cloud computing platform is aimed at the enterprise.

Best estimates put AWS at 2%-3% of Amazon’s revenue, and the IBM cloud at much less than 5% of IBM revenue. So sure, in the big picture they’ve got overlap, but nothing like what AMZN has with AAPL, GOOG & MSFT.

jqpabc123

Amazon doesn’t license software and best estimates puts Amazon’s hardware at near 0% of revenue — so the overlap with IBM is probably just as large as with AAPL, GOOG & MSFT.

Amazon is first and foremost a retailer. Their main interest in technology is related to selling digital content.

Actually, Amazon’s Kindle sales are a lot more than that, although hard to pin down exactly. Certainly 10’s of millions of devices to date. But I do agree that with the settling down of the tax issue, allowing Amazon to build in-state distribution centers, they will up the ante against brick & mortar.

jqpabc123

My previous post contains a mistake — it should have read “… near 0% of *net* revenue”. In other words, their hardware is being sold at or below cost as a means of facilitating digital content consumption.

Fair enough, but that media revenue is a big piece of what these four companies are fighting over. When Amazon’s media sales were physical (books, DVDs, CDs) it was safely in a space away from the other tech titans (here I’m classing Walmart/Target/etc as “retail” not tech). Once that mix shifted to digital content and the vendor of the content consumption device starting having a big influence on, and revenue share of, the content revenue (think iTunes, and now Google Play and XBox) Amazon was pushed into going head to head with them (Kindle, etc.)

One of the features of AWS I like best is all the pre-packaged images you can spin up quickly with various OS versions & pre-installed applications. Until recently, you paid through the nose for the flexibility though. I think (perhaps in response to the Google announcements) their pricing has come down quite a bit.

I think you are missing Microsoft’s Xbox Video (was Zune Video) when comparing Movies between these companies. Another interesting thing is that Amazon actually covers every platform with their Kindle App and even their shopping app and movie app are on Windows devices. So Amazon has all its bases covered.

Gary–You’re right. MS+Movies should probably be at least a yellow, since they do offer them on Xbox. I was thinking of the fact that they don’t sell them “in general” the way the others do, but certainly the Xbox offering counts and will continue to grow — likely into some type of Windows 8 service as well.

doubledeej

The also offer them on Windows Phone devices, and we expect them to be available in Windows 8/RT.

The article really only focuses on these companies consumer business and consumer profile. You have to also look at the infrastructure investment that players like Amazon have with there EC2 cloud platform which now runs a lot of other companies systems and Google’s forest size server farms. Like a iceberg the majority of these companies presence is below the surface.

Leslie–That might make an interesting companion piece. There wasn’t enough room to do much more on the infrastructure side than mention AWS and put the companies cloud offerings in the chart, but all four are definitely pursuing strategies to make them the back end of choice for the cloud.

Chris DeLong

This is a perfect example of free markets expanding the pie, increasing attainable value. Delusions will cloud this perfect example, it will be tossed aside as anti-competitive, price gouging, employee abusing, evil corporations taking over the world. You’re connected to the world around you in ways that were unimaginable just 50 years ago, and in some ways just 5 years ago (Twitter). The American Dream is dead…. my arse. Human ingenuity will never fully die, but victimhood and apathy may kill off a majority stake.

Glad you enjoyed it. I look forward to doing a “sequel” at some point after the next round of interactions. It’ll be interesting to see if it needs to include Facebook by then.

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